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Low Inventory Backfires on the Sacramento Housing Market
With such low inventory in the Sacramento housing market this spring, buyers may face multiple offers.
Low inventory in the Sacramento housing market tends to generate multiple offers for the super desirable homes but there can be unintended consequences for sellers. Now, even homes that are not super desirable or maybe have some sort of drawback that makes potential home buyers pass it by are receiving more than one offer, as compared to the slower activity in the 4th quarter of 2015. But this year’s start on the Sacramento housing market is very different from last year’s. What is making the difference in the low inventory this year is the low number of comparable sales available for an appraisal.
Of course, this is dependent upon area and the individual micro markets but if an agent, for example, bases sales on the last 6 months, predicting an upward swing will carry the momentum, an appraiser will use only the last 3 months. That means a February appraisal will use comps from November, December and January. Our January inventory is 27% less than our inventory from January 2015, which was mind-blowing low to start with. Low inventory can drive higher prices as buyers outbid each other. However, not every home will appraise if the number of comps available in that neighborhood are very low.
You can already see this formula at work in the median sales price in our Sacramento Housing Market, which has now dropped to $282,000. It has basically held steady from last May, around $290,000, jumping to $296,000 in December, but our January median home price has plunged by 5%. Our pending sales are rising due to the low inventory but will those homes appraise at value? What happens when pending sales outnumber the homes for sale?
Sellers sometimes don’t realize that February sales will be based on Nov-Jan comparables, and if those numbers don’t add up, it doesn’t matter which way the market is moving or how much a buyer will pay if the home won’t appraise. You can’t go to Zillow, pluck random sales and hope an appraiser will use those same numbers because they are probably too old.
Now, more than ever, you need an experienced Sacramento Realtor to help you navigate the market and to determine an appropriate course of action for you. There is a profit for sellers in a Sacramento housing market with low inventory, but it is all dependent on marketing strategy, negotiation skills and the last 3 months of comparable sales. You probably won’t find a more experienced agent than Elizabeth Weintraub. Call today at 916.233.6759.
Why October is a Good Month for the Sacramento Housing Market
Sacramento Housing Market statistics for 15 months thru October 6, 2015.
At first I had intended to show you a graph of the Sacramento housing market but the real information to be gleaned is not contained in the graph of the housing market in Sacramento, it’s actually in the numbers. Simply put, we do not have enough inventory, not enough homes for sale in Sacramento to satisfy demand. I noticed this in my own real estate business because all of my listings are selling. At any given time, I generally carry a couple dozen listings of one type or another, and at one point in 2011 my inventory was up to 75 listings or so. I’m selling them all now within about 30 days.
I checked the stats on other top producers, and their inventory is reduced, too. For the last 12 months in Sacramento, Elizabeth Weintraub ranks as the #7 agent in the area. If you’ve ever thought about putting your home on the market in Sacramento, now is the time to do it. Are you worried that you might not find another home to buy? No problem, you can sell your home contingent on finding another home, and most buyers will wait for you. This is the market to move up in. We’ve got a big group of entry-level home buyers itching to get into a home.
Interest rates are still low and not expected to rise until maybe December. If you wait to buy when everybody else under the sun is buying, you’ll have too much competition for the home you want to buy. Warren Buffet is the guy credited with saying that you should buy when nobody else is buying and sell when nobody else is selling. Our Sacramento housing market is a perfect example of that wisdom.
Look at the statistics in the UPPER RIGHT. Sales have fallen 75% the first week of this month as compared to the first week of last month. Our pending sales are down for the same time period by 35%. This is an excellent time to sell your home in Sacramento. You have the best of all worlds. The median sales price has remained pretty much steady at $290,000 for the past 4 or 5 months. That hasn’t happened in years. I can’t remember the last time that happened. I also can’t remember the last time my inventory of listings dropped below 10 homes for sale.
We’re not gonna see a big uptick in pricing next spring. If you want to sell a home, right now you should be on the market. We have fewer than 2 months of inventory.
Call your top producer Sacramento Realtor today, Elizabeth Weintraub, at 916.233.6759.
Sacramento housing market statistics, Trendgraphix.
Three Things About the Sacramento Housing Market
As a blogging Sacramento agent, I try to narrow my blogs to a singular thought, but I have 3 things that keep popping up over and over in unison about home buyers in the Sacramento housing market — which, if I don’t discuss these 3 observations in one blog I might never get around to it. The first is the problem in Elk Grove. I’ve lost count of the number of offers I’ve negotiated for my last bunch of listings in Elk Grove that have fallen out and had to be sold a second, third or fourth time.
These buyers go into escrow and then immediately cancel, which tells me they are writing multiple offers when they can’t afford to buy each of the homes. Where do they get this idea? Do their agents encourage this kind of unethical behavior? Our market is not so hot that they need to do it. They can make an offer on the home they want to buy and probably buy it without competition.
I’ve seen some agents write into the offer that the buyer is making multiple offers, and I want to hug these guys. I’ve had other agents include an addendum that says the buyers are absolutely not writing any other offers and will wait for the offer negotiations to reach a conclusion before doing so. You guys can dance on my grave if you want.
The second thing I’ve noticed about the Sacramento housing market is VA buyers are becoming ubiquitous. I’ve always said if you want to buy a home with a VA loan come over and sit down next to me, and my sellers will gladly cooperate. I love love love VA buyers. Once you get a VA buyer into contract, they close and they don’t go wandering around open houses wondering if they’ve made the right decision. They understand what a commitment means. You can count on a VA buyer. They have integrity.
The third thing about the Sacramento housing market is about home pricing under the next price point. By this I mean pricing a home at $499K instead of $505K, for example. It could go one of two ways. Pricing at $499K might mean that home buyers will fight over it and bid up that price. On the other hand, a buyer might also lowball that price. They probably won’t offer $499K, though. It will be higher or it will be lower, and it’s not always easy to predict which way it will go, regardless of the home’s beauty and desirability.
In super hot seller markets in the past, a $499K listing would almost invariably sell for more. In buyer’s markets, it will fetch less. In this market, though, an agent can’t always accurately forecast because this is a fairly balanced market with no leanings either way, although our inventory is still relatively low. Inventory will get lower as we edge closer to Thanksgiving, but that’s a blog for another day.
